Mental Models: The Thinking Tools That Make Leaders Clearer, Faster, and Sharper
Discover the frameworks that help you cut through complexity, overcome decision paralysis, and think clearly under pressure.
Leadership In Action: Mental Models in Leadership - Frameworks for Clear Thinking
There’s an interesting behaviour I’ve noticed in my many years working with leaders in different industries:
Most leaders when faced with a complex decision will lean on data, experience, or gut instinct to make a choice. Only a few leaders use some form of structured thinking or framework to ensure consistency and reliability in their decision-making process.
Unfortunately, this gap between making decisions based on good intentions and good thinking not only creates a lack of clarity over how decisions are made, but it can also lead to costly leadership mistakes.
The good news is that you can use mental models to help you gain greater clarity in your thinking and with it, make smart decisions going forward.
Mental models are essentially frameworks our mind uses to understand the world and make decisions. Some familiar examples of mental models include Occam’s Razor, Pareto Principle, and Opportunity Cost.
And research has shown that the more we use these mental models in our decision-making process, the more effective we become.
With that in mind, here are three mental models that can help you better navigate the increasing complexity found in leading teams and organizations.
First Principles Thinking
First principles thinking involves breaking down complex problems into their most basic, fundamental truths. This mental model challenges you to not rely on assumptions, but to question “What do we know for sure?”. And when you break down a problem into its basic truths to ask “What can we create with these?”
This mental model will help you when conventional approaches to making decisions aren’t working or if you suspect the attitude ‘this is the way things are done around here’ is part of the problem.
Second-Order Thinking
Second-order thinking addresses the current tendency towards short-term solutions by shifting the focus towards what might be the unintended consequences of your decisions.
When making a decision, this mental model gets you to ask “And then what?” to help you look beyond immediate outcomes to what the long-term impact might be.
This mental model will help you avoid being caught off guard from the unintended consequences of decisions made months or years ago because it will help you anticipate and plan for what might come.
Inversion
Legendary investor Charlie Munger once famously said “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Munger was a big advocate of the inversion mental model where instead of asking ourselves “How can I succeed at this?”, we invert the question and ask “What would cause me to fail and how can I avoid it?”
One need only look at Munger’s successful track record to appreciate the long-term benefit to applying this mental model to your decision-making process.
Applying these three mental models consistently will not only create greater clarity for your employees, but it will ensure your decisions drive success over the long run, and not just in the short term.
Get Inspired: Breaking Through Decision Paralysis
As complexity and uncertainty continues to grow, more leaders are feeling the pressure to take bold initiatives to lead their team and organization into the future.
And yet, a study by McKinsey found that most leaders are not taking action to drive business growth and success. Interestingly, a key issue behind this inactivity is not uncertainty, but leaders being overwhelmed with data that stops them from making any kind of decision.
Organizational psychologists call this “decision paralysis” where the combination of data overload, competing priorities, and the weight of getting it right lead to procrastination and delay in making a choice. And it’s a condition that affects both new and seasoned leaders.
In fact, Amazon founder Jeff Bezos noticed this was becoming a real problem as his company grew and realized the problem was that leaders in his organization were giving every decision the same level of scrutiny and deliberation, regardless of whether it was warranted or not.
So he developed a decision-making framework for his team and him to use called the One-Way Door and Two-Way Door framework.
As Bezos described them in his 2015 shareholder letter, one-way door decisions are “consequential and irreversible” and so these decisions require careful deliberation because once a decision is made, it’s hard to go back on.
Two-way door decisions, on the other hand, are “changeable, reversible”, and these decisions should be made fast because if you make the wrong choice, it’s easy to undo and start over.
In identifying these two types of decisions, Bezos noted how as organizations grow, there’s a tendency for leaders to treat every decision as a one-door one, leading to decision paralysis and slowing the organization’s ability to adapt and respond to changing conditions.
What makes this framework so effective is that it creates elegant simplicity in the face of growing complexity. That when faced with a decision, you just need to determine if it’s reversible or not to assess whether to move fast with a decision or take more time to deliberate.
This approach will also have the added benefit of giving your team ownership over decisions that don’t require your approval, which will also allow you to focus on those decisions that need your attention.
Food for Thought: The Power of Mental Models in Crisis Management
Being able to successfully handle crisis management is a reality every leader has to be ready to manage. And the fact is these moments will not only test your leadership, but your ability to think clearly under pressure.
The good news is that leaders who succeed at navigating crises are not necessarily the smartest or the ones with the most experience. Rather, what they share in common is that they have learned to utilize mental models to help them decipher the current landscape and the best path forward.
Think about what it feels like to be under a crisis. In these moments, it’s common to find ourselves having to respond to a situation with incomplete information, urgent demands coming from multiple directions, and conflicting priorities.
In the face of all this, there’s a tendency to take decisive, immediate action and worry about the long-term consequences later.
But leaders who manage crises successfully take a different approach. Their first response is to pause to orient themselves. Leaning on those mental models discussed above, they ask questions like:
What do we know for certain about the situation?
What assumptions are we making about what’s going on? and
What’s the most consequential decision we need to make in this moment?”
Fortunately, there are a few simple steps that you can take so you can also use mental models to better respond and address your next leadership crisis.
1. Build your mental model toolkit before you need it
Begin by choosing two or three mental models that resonate with you and learn to apply them in your everyday decision-making process. Make it a regular part of your work routines so that when the next crisis arises, your mental default is to employ your chosen mental models.
2. Share your mental model approach with your team
Once you’ve established what mental models work best for you, share it with your team so they understand your thinking process. This way, when a crisis happens, your team will have a singular direction to operate within because they’ll know what matters most and why.
3. Post-crisis, discuss decisions made, not just outcomes achieved
After a crisis has been resolved, most teams sit down to discuss what happened to ensure it doesn’t occur again. Another critical step in crisis management is to understand how the team thought about the challenge.
You can learn this by asking your employees questions like:
What assumptions did we make about the situation?
What did we miss? and
What mental model might have helped us to see things more clearly?
While every leader will face a crisis in the near future, the fact is we can’t know when that crisis will arrive or what it will look like.
But through the use of mental models, leaders can influence how they and their team think about the next crisis, and the best course of action that will get them back on track.